BANKING
Sharma urges banks to supply loans
The Business Secretary Alok Sharma has warned banks that it would be unacceptable if they refused funds to good businesses in financial difficulty because of coronavirus. Mr Sharma said banks were bailed out by the taxpayers in 2008 and that they must “repay the favour”. He was speaking after reports that SMEs are struggling to access government-guaranteed loans of up to £5m through the coronavirus business interruption loan (CBIL) scheme. The loans are interest-free for the first 12 months, however reports have emerged of some banks offering loans with double-digit interest rates after the first year. A report from the Corporate Finance Network said that one-fifth of all British SMEs will collapse in the next month, despite the Government’s support packages. The survey also found that one-third of SMEs would go bust if the lockdown lasted for three months. A spokesperson for UK Finance, the bank trade body, said: "Lenders are working hard to get financing to all businesses who need it as quickly as possible and are using the CBILs where appropriate, with some funding having already been provided under the scheme”. Chancellor Rishi Sunak is tomorrow expected to announce an overhaul of the bailout scheme for businesses, banning banks from asking small firms for personal guarantees on loans and removing a requirement for businesses to demonstrate that they have no other means of accessing funding.
Watchdog allows verification selfies
The Financial Conduct Authority (FCA) has relaxed certain rules in an effort to support firms and consumers as the COVID-19 outbreak continues to cause disruption. Banks have been told that they can accept smartphone selfies from users seeking to verify their identity, while scanned documents sent by email will be accepted as proof of identification. This comes as measures to slow the spread of the virus, including restrictions on travel, have had an impact on some mandatory anti-money laundering checks. The FCA’s interim chief executive Christopher Woolard, in a letter to financial services firms, said the City watchdog expects firms to provide “strong support and service to customers during this period”, adding: “Firms should be clear and transparent and provide support as consumers and small businesses face challenges at this time."
Many banker bonuses already handed out
The Guardian reports that while the Bank of England (BoE) has told large banks to scrap cash bonuses for executives amidst the coronavirus crisis, many lenders will have already handed over money as bonuses are usually paid alongside bankers’ wages in March. Citing sources with knowledge of such matters, the paper says the firms with the biggest investment banking bonus pots – Barclays, HSBC and Standard Chartered – are among those who hand over bonuses in March. With the BoE’s Prudential Regulation Authority looking to ease the economic blow of the pandemic, sources within the banking sector believe regulators will expect the next round of bonus payouts to be significantly scaled back.
Dividend suspension sees bank shares fall
A number of banks have seen their shares take a hit after the Bank of England advised lenders to scrap dividends amidst the coronavirus crisis. Lloyds, RBS, HSBC, Barclays and Standard Chartered saw their share prices hit in trading on the London Stock Exchange following the announcement. The banks, alongside rivals including Nationwide and Santander, said that they would not be returning money to shareholders via dividends, or buying back their own shares, until the end of the year.
Banks offer coronavirus support
HSBC is allowing customers to defer payments on personal loans for up to three months if they are struggling to make repayments due to coronavirus. It will also roll out at deferred payment scheme for credit card holders. Elsewhere, Starling Bank is offering a three month overdraft interest holiday to personal account holders and will waive all interest charges on arranged overdrafts during the period.
PRIVATE EQUITY
Private equity groups seek US small business rescue loans
The FT reports that industry lobbyists and executives from large investment firms have urged the White House to allow private equity-owned companies to access loans earmarked for small businesses affected by COVID-19.
Goodpack sale on hold
KKR’s plan to sell Singapore-based shipping container and logistics services firm Goodpack, has been suspended, with the COVID-19 pandemic impacting valuations, according to reports.
INTERNATIONAL
Deutsche Bank hits sudden stop on road to recovery
A coronavirus-driven sell-off has seen Deutsche Bank shares dip 52% in three weeks to a record low, valuing it around €12bn compared to BNP Paribas’ €35bn and JPMorgan’s $280bn valuation.
AVIATION
Virgin appeal for bailout backed by Airbus, Rolls-Royce and Heathrow
Aerospace firms Airbus and Rolls-Royce, along with Heathrow airport, have lobbied on the behalf of Virgin Atlantic to the Government in regard to a state bailout of the airline. Virgin has parked up to 85% of its aircraft fleet and put most staff on eight weeks' unpaid leave, as well as cutting executive pay, and offering redundancy and year-long sabbaticals to its 8,500 employees.
CONSTRUCTION
Taylor Wimpey directors reduce pay
Taylor Wimpey’s directors will take a pay cut and bonuses have been scrapped as it looks to conserve cash during the coronavirus crisis. The firm said its remuneration policy for 2020 has been changed due to measures that include closing construction sites. The housebuilder said there will be a 30% reduction in basic salary and pension for the duration of the Government-imposed lockdown, with the issue to be reviewed if restrictions remain in place beyond June. Annual bonuses have been axed and non-executive directors will take a 30% reduction in their fees.
FINANCIAL SERVICES
Finncap wages cut
Senior executives at Finncap have had their salaries cut by up to 92.5% as the stockbroking industry braces itself for a “very difficult trading period ahead”. Amid the coronavirus pandemic, employees have been asked to take part of their salaries in stock options and others have been furloughed. The final dividend, usually paid in the summer, has been scrapped.
Finablr appoints CEO
Finablr has appointed a new chief executive, with Bhairav Trivedi taking the role. Former CEO Promoth Manghat stepped down last month as the firm sought to accommodate requirements laid down by its auditor, which has since resigned over concerns about the composition of the board, corporate governance, related-party transactions and off balance sheet debt.
MANUFACTURING
Manufacturing activity contracts
The IHS Markit / CIPS purchasing managers' index has revealed that in the wake of the COVID-19 outbreak, new orders in the manufacturing sector were down to 47.8 points in March, representing a three-month low on an index where a score of below 50 indicates contraction. Duncan Brock, group director at the Chartered Institute of Procurement and Supply, commented: “The manufacturing sector was knocked sideways by the impact of COVID-19 and into contraction territory, experiencing some of the most challenging trading conditions since PMI records began.”
RETAIL
Morrisons data leak victory
The Supreme Court has ruled that supermarket Morrisons is not liable for a data leak by former auditor Andrew Skelton which affected some 100,000 employees of the chain. Mr Skelton was said to have held "an irrational grudge" against the firm after being reprimanded, and posted the payroll details of staff on the internet, later sending copies of the data to newspapers while posing as a concerned member of the public. The company had in previous rulings been found "vicariously liable" for the leak.
SPORT
Premier League in pay own goal?
Premier League clubs have come under fire after placing staff on furlough amid fears they will not be able to negotiate a pay cut with their players. Tottenham, Newcastle, Bournemouth and Norwich have opted to utilise the government's job retention scheme. Julian Knight, the chair of the Digital, Culture, Media and Sport committee, condemned the move and said clubs are living in a “moral vacuum” and that players should be first to sacrifice their wages.
ECONOMY
Companies expect to run out of cash within weeks
A survey by the British Chambers of Commerce (BCC) has found that 62% of businesses have only enough cash to keep operating for the next three months, while 18% said they had sufficient capital to cover their outlay for only a month. The survey found that companies were planning to put large numbers of workers on furlough after the Government guaranteed that the taxpayer would pay 80% of staff salaries up to £2,500 a month. Adam Marshall, director-general of the BCC, said that companies had reported a sharp decline in revenues. “The coronavirus pandemic has taken a heavy toll on business and economic activity across the UK,” he said.